It's hard to imagine randomly receiving $2,000 -- with no strings attached -- and be anything other than happy. But watching "Let's Make a Deal" the other day showed me the opposite may be true.
We enter 2019 with a lot of volatility in the stock market, just as we did in January 2009. Presently, the world economy appears to be slowing down. But the current situation is nothing like the economic jolt that occurred 10 years ago. We've been experiencing a recovery since then that was hard to anticipate at the time.
Market downturns happen. While acknowledging the pain that losses may cause, the current situation can be viewed as a "bright, shiny object" that prevents us from focusing on our long-term investment goals. Diversification can help us ride out the storm in the interim. Take a listen.
Here's a favorite from the Moody Blues "Days of Future Past" -- a live version of "Tuesday Afternoon." The year 1970 clearly had a different look to it.
The benefits of diversifying your portfolio may be better understood by highlighting its practical application. A client of mine wanted to withdraw a decent amount of money from her account for home repairs. The client needed the cash immediately, which was not fortuitous given the drop in the stock market. Instead of selling stock mutual funds while the market was down, and locking in the recent losses, the client tapped into her bond mutual funds that have held up nicely.
I recently attended the annual Schwab conference for financial advisors. The top-notch speakers included former Federal Reserve Chair Janet Yellen and historian Niall Ferguson as well as a variety of investment and industry experts. The summary below highlights some of the more interesting ideas presented. Please read to the end to find out which topic was not mentioned, even though it was the darling of last year's event.
While the stock market is poised to start the day on a positive note, the last couple of weeks have been a bracing reminder that stocks do not rise in a linear fashion. They can go down.
More Articles ...
- Smarter Charitable Gifting Under the New Tax Law
- Nothing Says Heading Back to College Like Legal Documents
- The Perfect Age: Life and Financial Planning
- Creeping Slowly Into Debt